Lawmakers falter on taxing issue

(February 5, 2004) — (Little Rock-AP) -- Backers of a seven-eighths-of-a-cent sales tax increase are scrambling to shore up support. The measure failed in the state House yesterday, leaving the state no way to pay for a new school funding formula that's part of an effort to make court-ordered education reforms. The sales tax increase is the centerpiece of a 400 million dollar tax package to pay for improvements in the public education system. It was rejected moments after House members approved a scaled-down corporate franchise tax increase, the other piece of the package. Also yesterday, the House Education Committee agreed with a Senate change to a bill that would divert money from other state agencies to support public schools if there is a shortfall. The bill would establish an Education Adequacy Fund into which new state revenues for public education would flow. Last week, the Senate added the so-called "doomsday paragraph" to make public school funding the state's top budget priority as the Supreme Court required. The bill next goes to the House floor for final legislative action.